Energy regulator, Ofgem is consulting on plans to standardise and strengthen support for prepayment customers and for all customers who are struggling to pay their energy bills.
In March this year, suppliers voluntarily agreed to support vulnerable customers through COVID-19, including those on prepayment meters facing difficulties in topping up while self-isolating or in financial distress.
Ofgem is now proceeding with proposals to make stronger protections for prepayment meter customers, who are more likely to be in vulnerable circumstances, into a permanent licence requirement.
Under these proposals, suppliers would have to offer emergency and friendly hours credit (for example, when top-up points are closed to all prepayment customers, plus offer additional credit for consumers in vulnerable circumstances to provide extra breathing space while working out alternative arrangements to pay. These would include customers who temporarily cannot afford to top up or get to their local shop to top up because of a mobility issue or due to self-isolation.
Ofgem has been concerned about increasing numbers of prepayment customers who go without energy or ‘self-disconnect’ after running out of credit on their meter since before COVID-19, and consulted on initial proposals last year. Many suppliers already provided extra support, typically £5-£20 credit per fuel at a time, but this was inconsistent across the industry.
Ofgem is also proposing to strengthen protections so that suppliers provide extra support to help customers struggling to pay their energy bills from this winter. This includes setting repayment rates based on a customer’s ability to pay and monitoring these arrangements. Many suppliers already offer this support, but making it a formal licence requirement will ensure more customers are helped.
Jonathan Brearley, Chief Executive of Ofgem, said “I want to thank suppliers for their efforts during this crisis in keeping essential energy supplies flowing to customers, particularly those in vulnerable situations.”
“These permanent protections will reduce the number of prepayment customers temporarily going without energy because they cannot afford to top up.”
“It is always best for customers to keep up with their energy bills if they can. But at this time when many may face financial hardship, these proposals mean those who are struggling to keep up are assured of some breathing space.”
Dame Gillian Guy, Chief Executive of Citizens Advice, said “The problems faced by customers using prepayment meters, and others struggling to keep up with their payments, have been a big concern for Citizens Advice for many years.”
“It was heartening to see the industry rally round when the coronavirus pandemic struck. A series of measures was put in place to help people struggling with their energy bills – whether that was because they were shielding and finding it difficult to top up; or they’d seen a sudden and dramatic cut in their income.”
“It’s even more welcome to see the protections we’ve been arguing for made permanent. It’s a recognition that as we move out of this first phase of the pandemic, many people will still need a more flexible approach to keeping up with their payments.”
“Energy is an essential service – we all need it for basics such as home heating, and cooking and washing. At a time when more people are building up debts, everyone should be confident they’ll be given time and support to get their finances in order without the risk of disconnection.”
Peter Earl, Head of Energy at comparethemarket.com, said “It remains vitally important that vulnerable people receive the support they need from their energy supplier at this challenging time. Ofgem’s proposals are timely and necessary, because while lockdown may have been relaxed, the economic fallout from COVID-19 and the financial hardship facing millions is far from over. Our research shows that 16% of households are not confident they will be able to meet the demands of their household bills in the coming weeks, rising to 23% for families with children at home. Ofgem’s package of support measures will be a welcome relief to customers across the UK and, crucially, will ensure that households facing difficulties will not see their energy supply cut off.”